Twitter pushes for profit, slices nine percent of workforce
Twitter has revealed plans to cut nine percent of its workforce in a move designed to speed up revenue growth.
On Thursday, the microblogging platform released its Q3 2016 earnings report, displaying revenue of $616 million, an increase of eight percent year-on-year.
Twitter's advertising revenue also rose to $545 million, an increase of six percent year-on-year, with mobile advertisement revenue representing roughly 90 percent of this total.
Despite a financial result which was better than expected, the company has still yet to turn a profit, with a Q3 GAAP net loss of $103 million.
The microblogging platform accounted for 317 million active monthly users in Q3, an increase of three percent year-on-year and up from 313 million in the previous quarter.
"We believe that accelerating growth in audience and engagement will help re-accelerate growth in our ads business over time," the company says. "In addition, we need to win our share of social marketing budgets and continue to deliver advertising solutions that extend beyond social marketing -- into performance and premium mobile video budgets."
Twitter's financial stance is improving, but this does not mean the workforce is safe. If profitability is going to appear in the company's future, Twitter says that restructuring is necessary -- and therefore some cutbacks have to be made.
In a letter to shareholders, Twitter said a new "restructuring and reduction" effort will mean nine percent -- roughly 350 employees -- of the global Twitter workforce will be axed.
The restructuring, designed to make sales, partnerships, and marketing more efficient, will also see investment in "non-core areas" eliminated.
Twitter estimates that reducing the workforce will result in expenditure and severance costs of $10 to $20 million, alongside $5 to $10 million in stock-based compensation claims.
"We're getting more disciplined about how we invest in the business, and we set a company goal of driving toward GAAP profitability in 2017," said Anthony Noto, Twitter's CFO. "We intend to fully invest in our highest priorities and are de-prioritizing certain initiatives and simplifying how we operate in other areas. Over time, we will look to invest in additional areas, as justified by expected returns and business results."
As revenue was higher than Twitter's own estimate of $606 million, the company has also adjusted its outlook for the full 2016 financial year.
Twitter now expects revenue to be in the range of $700 to $715 million and capital expenditure to be no more than $360 million.